November 29, 2010

There are 2 factors powering this correction in the dollar. One is the political tension, and the military tension we got last week on the Korean peninsula. And you know, there`s a reflexibility, almost Pavlovian quality to this type of dollar rally. Whenever there is any type of military conflict anywhere in the world, traders buy the dollar.The idea is, there is some tension, so we need a flight to quality. And for whatever reason the dollar is perceived as representating that quality. So when you are nervous about something and you are seeking refuge, they sttill seek it in the dollar because it works. They will keep doing it until it does not work.

Because it certainly does not improve the fundamentals of the US economy or the US dollar just because there is military action going on in Korea. If anything, if things escalate and we get involved and have to spend more borrowed mone, that actually makes the situation worse for the dollar. But the trader does not think that far ahead...

November 22, 2010

I have always advocated that investors hold at least 5 to 10% of their portfolio in physical precious metals — gold and silver bullion and coins. Tangible wealth, not subject to confiscation, registration, or unwarranted intrusion by government, should be a core component of any well-balanced portfolio.

I believe that physical precious metals are the ultimate insurance policy in today's perilous world. No other investment offers the same level of financial privacy, while eliminating counterparty risk. Physical precious metals do not depend on a court, a bank, or a stock exchange — their value is intrinsic.

I expect gold and silver prices to move much higher. Pressure is building in all parts of the world for solutions to the debt crisis that many nations face. The classic way for governments to deal with excessive debt is by debasing the currency, i.e. inflation. This has already started, with the U.S. Federal Reserve printing trillions of new dollars since 2008. Many observers think the world's only superpower is heading toward bankruptcy. And there is no one big enough to bail us out. This means inflation of historic proportions. Potentially sending gold prices higher than most hard money investor would ever dream.

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

November 17, 2010

As many of you know, I feel global currency diversification is essential to the long term prospects of an investment portfolio. More importantly it protects American investors from the lost purchasing power that would result from a decline in the U.S. dollar. For those investors that don't want the volatility of stocks, international non-dollar bonds can be an effective way to achieve this goal.

However, for many investors the amount of money needed to construct a truly diversified portfolio of international bonds is too great. Furthermore, we believe many clients prefer an actively managed product that is overseen by a portfolio manager who not only seeks to select high quality, undervalued bonds, but also monitors their performance and employs a disciplined investment process.

It's for this reason that we are proud to add a new fund to our product offerings at Euro Pacific Asset Management, LLC: the EuroPac International Bond Fund.

This new mutual fund seeks to preserve purchasing power and generate income, and is run by the same management team that heads the Euro Pacific wealth management division and the EuroPac International Value Fund: myself, as the Investment Committee Chairperson, and Jim Nelson, CFA, as the portfolio manager1.

As with all of our managed products, the fund will adhere to my preference for diversifying currency risk by investing in a number of countries with positive macro-economic fundamentals (including trade surpluses, low government debt, high interest rates relative to other nations and low inflation). The fund will invest primarily in investment grade government bonds, with the remainder dedicated to what we believe are undervalued corporate bonds from companies in attractive sectors with improving fundamentals. In many cases, these are bonds issued by the same companies held in the International Value Fund.

Because our team believes many countries are likely to see rising interest rates in the future, the initial preference of the fund will be to hold bonds of shorter duration. Although these bonds offer lower yields than longer term paper, they would likely show less volatility in a rising interest rate environment. However we believe the yield will be attractive compared to other bond portfolios concentrating on similar duration.

in Europac.net

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

"The reason I knew QE1 would fail, and that the Fed had no exit strategy (other than more rounds of easing), is because the remedy is totally flawed. If Bernanke’s predecessor, Alan Greenspan, had engaged in prudent monetary policy, we never would have arrived at the point of desperation that made quantitative easing a palatable option. However, we did, and Bernanke’s understanding of economics is so remedial that making the right choice is essentially impossible for him. Now, we are caught in a vicious circle of spending, borrowing, and easing."

in Europac.net

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

November 15, 2010

"The reason that college tuition is so expensive is because government has guaranteed loans to make it easy to borrow money to pay whatever inflated prices universities want to charge. If students didn't have access to those government guarantees, college prices would be falling so that students can afford to go."

in www.diamondbackonline.com

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

November 14, 2010

"The world desperately needs to go back to a real monetary system that's based on real money which is gold ... If we are going to go back to a gold standard, it's not at $1,400 gold. If we want to maintain our current wages and prices in this country then gold has to go ... to $5,000 - $10,000 at a minimum."

in TheStreet.com

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

November 11, 2010

“He’s monetizing government debt. He’s going to destroy the dollar. The only way that we can pay off maturing debt is by selling new debt. That is a Ponzi scheme pure and simple.”

in CNBC

Schiff argues that we need every ounce of gold at Fort Knox, especially for when the dollar collapses. “The countries that are going to dominate the world are the ones that have the most gold,” he comments.

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

November 9, 2010

”I’m very concerned about the long-term impact of QE2 on the economy. When the government does QE2 it’s not just the stock market that’s going up. Everything goes up. He’s talking higher prices at the pump as well as the supermarket.

So even though QE2 will push the stock market higher – people who own stocks aren’t any richer. When they sell those stocks and go to buy food or gasoline it’s going to be more expensive. It’s an illusion created by the Fed.”

in CNBC, Half Time Report

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

November 8, 2010

As the world awaits another $500 billion flood from Bernanke's printing press, central bank governors from Brasília to Tokyo are preparing to respond in kind. This is the monetary equivalent of a nuclear war, except instead of radiation, bombs of inflation threaten to make the world economy uninhabitable for saving and productive enterprise.

While much of the attention has been focused on China and accusations that it is a "currency manipulator," the first shot in this war was clearly fired by the US Federal Reserve. Last month, the Fed came out with a statement that, for the first time ever, said inflation is rising at a rate "below its mandate." That is, they acknowledged that the deflation threat had passed, that prices were stable - but they still intended to send prices higher.

Since the Bretton Woods Agreement was signed in the wake of World War II, the global monetary system has been based on the US dollar. This means that when the Fed decides to create trillions of dollars of inflation, other countries can't simply say, "let them dig their own grave." Instead, because their international transactions are denominated in dollars, they feel a pressure to maintain relatively stable exchange rates between their currencies and the dollar.

Most countries do this informally and have their own (bad) reasons for maintaining a certain level of inflation. China, however, is more literal in its devotion to the dollar system, perhaps due to its psychology as a new arrival on the world stage. So, in recent history, the People's Bank of China has largely maintained a "peg," by which it currently offers to pay 6.8 RMB for every dollar deposited, no matter how many extra dollars the Fed prints. To put it another way, China, and to a certain extent the entire world, is on a Dollar Standard -- like the Gold Standard, but based on another fiat currency instead of a precious metal.

What this also means is that China does not intentionally devalue its currency against the dollar, but only to keep pace with the dollar. Chinese Commerce Minister Chen Deming said as much in an interview on October 26: "Uncontrolled" issuance of dollars is "bringing China the shock of imported inflation." Most emerging markets are the same way. In order to prevent rapid economic dislocations, and often to appease their powerful export lobbies, these countries seek to maintain a status quo versus the dollar - whether through inflation as with China or capital controls as with Brazil and South Korea, or both.

In short, the currency war is really just the rest of the world trying to shield itself from a barrage of nuclear dollars.

The end result is that the entire civilized world is locked in a race to inflate, and no fiat currency is truly safe. In my brokerage business, I advise clients to buy companies - not currencies - in countries that I believe will thrive in the war's aftermath. China could dump the peg tomorrow and, after a period of adjustment and write-offs, would continue to grow apace. The UK, on the other hand, is happy to be locked in a competitive devaluation as it helps the government avoid imminent default while it puts through budget reforms. But regardless of their strategic positions, all major central banks will likely engage in some money printing to keep their currencies level with the rapidly devaluing US dollar - until the greenback loses its reserve status. (This may happen sooner than later, if an agreement this month between China and Turkey to stop using dollars in their transactions is any indication.)
As the Fed seeks to blow up the global monetary system, I take comfort in the fact that gold cannot fight a currency war because it is not a currency. Gold is money. Currencies used to be backed by money until the global fiat system was introduced under President Nixon. Fiat currency can be printed at will until the economy collapses, as has happened many times in history. Money is impossible to devalue at the whim of politicians because it is naturally scarce. Even in the ruins of Europe after the Second World War, when there was no central authority and chaos reigned, an ounce of gold was worth what it always had been.

If we are witnessing a fight to the death among fiat currencies, then gold is surely the Red Cross - a peaceful arbiter and source of mercy for our accumulated savings. While I do believe that life will go on after this war, as with all others, the thought of the world's savers all hiding their assets safely in gold brings to mind the old question: What if they gave a war and nobody came?

November 6, 2010

"Commodity and stock prices will rise, but it will not evidence a bubble but rather a Permanent reduction of the value of the dollar. As the dollar loses value, prices rise to compensate for the decline."

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

November 5, 2010

At the end of the day, all the deflation talk is a red herring. As global demand for dollar-denominated debt falls, the Fed is looking for an excuse to pick up the slack. The true purpose of QE2 is to disguise the decreasing ability of the Treasury to finance its debts.

By announcing QE2, it the Fed can monetize government debt without the markets perceiving a funding problem. If the truth were known, a real panic would ensue. So, the Fed pretends buying treasuries is simply part of its master plan to boost the economy, even though, in reality, it is simply acting as the buyer of last resort.

November 3, 2010

I have always advocated that investors hold at least 5 to 10% of their portfolio in gold and silver bullion and coins. Tangible wealth, not subject to confiscation, registration, or unwarranted intrusion by government, should be a core component of any well-balanced portfolio.

I believe physical precious metals are the ultimate insurance policy in today's perilous world. No other investment offers the same level of financial privacy, while eliminating counterparty risk. Physical precious metals do not depend on a court, a bank, or a stock exchange — their value is intrinsic.

I expect gold and silver prices to move much higher. Pressure is building in all parts of the world for solutions to the debt crisis that many nations face. The classic way for governments to deal with excessive debt is by debasing the currency, i.e. inflation. This has already started, with the U.S. Federal Reserve printing trillions of new dollars since 2008. Many observers think the world's only superpower is heading toward bankruptcy. And there is no one big enough to bail us out. This means inflation of historic proportions. Potentially sending gold prices higher than most hard money investor would ever dream.

in Peter Schiff`s Gold Report

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.

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BIO

Peter David Schiff (born March 23, 1963) is an American economist, author, commentator and popular video blogger. Schiff, a licensed stock broker, is the president of Euro Pacific Capital, headquartered in Westport, Connecticut